Automatic renewal clauses in a lease: are they enforceable?

An automatic renewal clause is usually enforceable as an ordinary lease term, but New York and Wisconsin will not enforce one against a tenant unless the landlord first sends a written reminder 15 to 30 days before the tenant's notice deadline. Without that reminder, the tenant can move out when the original term ends.

What is an automatic renewal clause in a lease?

An automatic renewal clause, sometimes called an evergreen clause, says the residential lease renews for another set period unless one side gives notice by a deadline. A typical version renews a one-year lease for another year unless the tenant gives 60 days' notice before the end date.

The clause helps landlords avoid surprise vacancies. The risk for tenants is missing the deadline and finding themselves bound to a new term. Because the consequences are serious, some states require landlords to remind tenants before the deadline arrives.

What does New York require before an auto-renewal binds a tenant?

New York General Obligations Law 5-905 makes an automatic renewal provision inoperative unless the landlord gives the tenant written notice calling attention to it. The notice must arrive at least fifteen days and not more than thirty days before the date the tenant must give notice of intent to leave.

The statute also controls delivery. The reminder must be served personally or sent by registered or certified mail. An email or a line in a newsletter does not meet that standard.

Here is how the timing works. If the lease requires the tenant to give notice by March 1, the landlord's reminder must be served between January 30 and February 14 for a non-leap year. A reminder sent earlier or later than that window does not satisfy the statute.

What does Wisconsin require?

Wisconsin Statutes 704.15 applies to residential leases that renew or extend automatically unless the tenant or either party gives notice before the lease ends. That provision is not enforceable against the tenant unless the landlord gives written notice calling attention to it at least 15 days but not more than 30 days before the tenant's notice deadline.

The reminder must be delivered in the same manner as a notice under Wisconsin Statutes 704.21, which governs how landlord-tenant notices are served. Landlords should use one of those methods and keep proof of delivery.

Can a lease charge a fee if the tenant forgets to give notice?

Some states restrict that. Colorado C.R.S. 38-12-801(3)(a)(IV) bars a lease provision that sets any fee, damages, or penalty for a tenant's failure to give notice of nonrenewal, except for the landlord's actual losses caused by the missing notice. A provision that breaks this rule is void and unenforceable.

Even where no statute addresses it, a large flat fee for a missed notice can draw scrutiny as a penalty. Tying any charge to real costs, such as lost rent while the unit is re-rented, is the safer drafting choice.

How do you draft an automatic renewal clause that holds up?

State the renewal length, the exact notice deadline measured in days before the end date, and how notice must be delivered. Say whether the rent changes at renewal and how the tenant will learn the new amount. Put the clause in plain language near the term section, where a tenant will see it.

Many landlords skip a year-long auto-renewal entirely and let the lease convert to a month-to-month tenancy after the term ends. That approach keeps the tenant in place while letting either side leave with ordinary periodic notice.

In New York and Wisconsin, calendar the reminder letter the day the lease is signed. Count back 30 days and 15 days from the tenant's notice deadline and send the reminder inside that window by an approved method.

What should the landlord's reminder letter say?

Keep it short and specific. Name the tenant and the address, quote or summarize the renewal clause, and state the date the renewal takes effect and the length of the new term. Give the exact deadline for the tenant's notice and explain how the tenant must deliver it.

If the rent or other terms will change at renewal, say so in the same letter. A reminder that only points to the clause meets the New York and Wisconsin statutes, but a letter that also lists the new rent prevents a second dispute later. Keep a copy of the letter with the mailing receipt or proof of personal delivery in the tenant file.

Rent changes at renewal only if the clause allows them. Many renewal clauses carry the existing rent forward. Others allow an increase at renewal, either by a set amount or by written notice before the renewal date. If the lease is silent, the renewed term generally runs on the same terms as the original one.

Landlords who plan to raise rent at renewal should write the method into the clause and follow any state notice rules for increases. Tenants should read the rent terms before deciding whether to let a lease renew.

How can a tenant opt out of an automatic renewal?

Find the notice deadline and the delivery method in the lease, then give written notice well before the deadline. Certified mail with a return receipt, or a delivery method the lease names, creates proof. Keep a copy of the letter and the receipt.

If the deadline has already passed, ask the landlord in writing whether they will release you from the renewal. Many will agree in exchange for help finding a replacement tenant.

Tenants who want to stay but on different terms can use the same deadline to negotiate. A written request for a shorter renewal, a switch to month-to-month, or a smaller rent increase sent before the notice date gives the landlord time to respond before the clause takes effect. Get any agreed change in a signed addendum.

What happens if the landlord never sent the reminder?

In New York, the renewal provision is not operative under General Obligations Law 5-905. In Wisconsin, it is not enforceable against the tenant under Wisconsin Statutes 704.15. In both states, the tenant can leave at the end of the original term without being held to the renewal, though the rest of the lease still applies through that end date.

Sources

• New York State Senate, General Obligations Law 5-905
• Wisconsin State Legislature, Statutes 704.15
• Colorado Revised Statutes, Title 38 (C.R.S. 38-12-801)